Lender FNB has released its House Price Index for August 2018.
The index is based on FNB’s own valuations database and includes a number of cut-off prices (no properties lower than R20,000 or higher than R15 million) when compiling its data.
It also asks buyers, sellers and real estate agents a number of questions during the property transaction process – including why they are buying or selling a home.
According to FNB there are eight main motives behind why South Africans are selling their homes right now.
“Of the eight categories, we identify four as ‘procyclical’ motives for selling, in other words, categories that will increase in significance as the property market strengthens and decline in significance as it weakens,” said FNB property sector strategist, John Loos.
These four categories are:
- selling to upgrade – 11%
- selling to downscale with life stage – 24%
- selling to relocate to a different region within South Africa – 10%
- selling to move nearer to work or amenities – 6%
“As a group, these four motives have declined in significance from a high of 61% of total selling as at the second quarter of 2014, to 49.34% by the second quarter of 2018,” Loos said.
In the ‘counter-cyclical reasons for selling’ category, there is only one key motive, and that is selling to downscale due to financial pressure, he said.
“Understandably, this motive should increase in significance in a ‘downturn’ and vice versa in better economic and property times. Indeed, from a multi-year low of 11% of total selling in the third quarter of 2014, mildly higher interest rates and a stagnating economy have pushed this selling motive mildly higher to 14.7% by the second quarter of 2018.”
In comparison the three non-cyclical motives include:
- Selling due to change in family structure – 16%
- Moving for safety and security reasons – 11%
- Selling to emigrate – 7.8%
“The former two have moved more or less sideways in recent years, but emigration-related selling has risen noticeably since 2013 on the back of weakening sentiment in South Africa often related to concerns over its long-term policy and political direction,” Loos said.
“From a low of 2% of total selling, the emigration motive has risen to 7.8% of total selling by the second quarter of 2018,” he said.